Car Rental Agreement

By a car rental agreement, the owner or possessor of a car gives the car into the use of another person and the user undertakes to pay a fee for using the car. The Avokaado car rental agreement can be used:

for renting of most kinds of vehicles;

if you wish to rent a car to a particular person or a group of persons;

if you wish to establish restrictions on mileage, the country of use or the authorised users.

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Frequently asked questions

Can only the owner give a car for rent?

In order to give a car for rent, the lessor has to have the right to do so. The owner of a car generally always has the right to dispose a car, including the right to give the car into use. However, the lessor does not necessarily have to be the owner of the car. For instance, the majority of car rental companies are not the owners of the cars they give on rent – they in turn lease or rent the cars from the owners. In order for a possessor of a car who does not own the car to give the car on rent, the possessor must be granted the relevant right by the owner of the car.

Can a lessee give the car into the use of another person?

As a general rule, a rented car may only be given to other person’s usage with the consent of the lessor. It is definitely worth establishing in the rental agreement whether the lessee has the right to give the car into another person’s usage, specifying the people who are authorised to use the car.

Who is responsible for the maintenance and repair of a rented car?

The lessee is generally obligated to carry out the maintenance necessary for the ordinary upkeep of the car, and if the car is damaged or destroyed due to the lessee’s fault, compensate the damages caused.

In the agreement, the parties may agree on the division of the maintenance and repair obligation (as well as any other obligation, e.g. insurance premiums) which differs from the general principles described above.

Does a fee definitely have to be charged upon giving a car on rent?

In essence, there is no obligation to charge a fee upon giving a car to another person to use. Among individuals, giving a car to another person to use free of charge in not a problem, but among companies, taxation issues have to be considered. Depending on the particular situation and relationship, it should be assessed whether giving a car to use free of charge entails the obligation to pay fringe benefit tax or income tax on expenses not related to business activities.